Bush allows Congress one more week on farm law (Reuters via Yahoo! News)

By Charles Abbott
WASHINGTON (Reuters) - President George W. Bush will reluctantly give Congress one more week to wrap up the new U.S. farm law, already six months overdue, the White House said on Friday, calling for crop subsidy reforms.
House and Senate negotiators are deadlocked over how to pay for a $10 billion spending increase for the farm law and how to whittle down a tax package backed by the Senate.

The White House said Bush will sign a bill that keeps agricultural programs in place through April 25. Lawmakers say they are close to agreement on the new, omnibus farm law that would cost $600 billion over 10 years. Public nutrition programs like food stamps would receive two-thirds of the money.

"The president will sign the extension," said White House spokesman Scott Stanzel. "We remain disappointed the Congress hasn't been able to achieve an agreement on a reform-minded farm bill."

Along with stricter crop subsidy rules, the White House says the new law should not raise taxes or resort to overspending. One White House proposal is to deny crop subsidies to anyone with an adjusted gross income above $500,000 a year. The cutoff now is $2.5 million AGI.

The one-week extension was needed because a one-month extension of agricultural programs expired on Friday. Without the extension, the farm program would revert to 1949 rules that impose land controls and set unworkably high support prices.

Negotiators were scheduled to meet Friday for the first time in two days. They exchanged offers in private on Thursday for the tax package and "offsets" for the spending increase.

Senior House negotiators suggested cuts totaling $1 billion over 10 years in the "direct" payments of $5.2 billion guaranteed annually to grain, cotton and soybean growers. Direct payments are criticized as frivolous in an era of record-high farmgate crop prices.

They also proposed $500 million in additional funding for nutrition, for a total increase of $10 billion in the bill. At present, the bill also would boost spending on land stewardship, specialty crops and biofuels while trimming crop supports, crop insurance and agricultural research.

(Reporting by Matt Spetalnick and Charles Abbott, editing by Matthew Lewis )